In a decision that could have widespread application to cases challenging agency action, the California Supreme Court in Voices of Wetlands v. State Water Resources Control Boardrecently upheld the use of a procedural mechanism that some earlier decisions had held impermissible—the interlocutory remand to an administrative agency. Use of this procedure can significantly expedite the litigation and the administrative proceedings when an agency makes findings that are not sufficiently supported by the evidence.

In the case, the owners of the Moss Landing Power Plant applied to the Regional Water Quality Control Board for a National Pollutant Discharge Elimination System (NPDES) permit, which must be reissued every five years, for the existing Moss Landing Power Plant. At the same time, they sought the California Energy Commission’s approval to modify the plant.

The plaintiffs challenged the approval of the NPDES permit, alleging that it violated Clean Water Act section 316(b) by failing to require the “best technology available” for the plant’s cooling-water intake system.

Before reaching the merits of the plaintiffs’ section 316(b) argument, the Court addressed two procedural questions. First, the owner of the power plant argued that the case should have been filed directly with the Supreme Court, under the special provisions of the Warren-Alquist Act governing the siting of power plants. The owner’s theory, supported in an amicus brief that the Energy Commission submitted, was that the Energy Commission evaluated the proposed plant modifications’ consistency with local, state, and federal law, including Clean Water Act section 316(b). And the Energy Commission’s plant siting or modification decisions are only reviewable by filing a case directly with the Supreme Court. Therefore, according to the owner, the case was required to be filed directly with the Supreme Court under the Warren Alquist Act.

Reasoning that the NPDES permit is required by federal law, and is required under California law to be issued by the water boards, the Supreme Court rejected this argument. According to the court:

Although the Energy Commission must make a general finding, before issuing a powerplant certification, that the project conforms to all applicable local, regional, state, and federal laws, such a certification cannot contravene, subsume, encompass, supersede, substitute for, or operate in lieu of, the federally required NPDES permit.

Second, the Court addressed the plaintiffs’ interlocutory-remand argument. The trial court had found that one of the Regional Board’s findings was unsupported by the evidence. But rather than enter judgment in favor of the plaintiffs, it ordered the case remanded to the Regional Board for further findings. The Regional Board held a publicly noticed hearing on the findings, took new evidence, and affirmed their original finding. The Superior Court then considered that new evidence, along with the earlier evidence the Regional Board had considered, and upheld the Regional Board’s issuance of the permit.

This may seem like an arcane nuance that would only interest die-hard civil procedure aficionados. But in granting the administrative remand, the Superior Court did something extraordinary: it allowed the Regional Board to shore up holes in the record mid-case, transforming what would have been a sure loser for the agency into a winning case.

The Supreme Court held that this procedure, the interlocutory remand, is permissible. The Court’s opinion seems even to encourage the use of this procedure in certain circumstances:

such a device, properly employed, promotes efficiency and expedition by allowing the court to retain jurisdiction in the already pending mandamus proceeding, thereby eliminating the potential need for a new mandamus action to review the agency’s decision on reconsideration.

Ultimately, after setting these procedural questions, the Supreme Court upheld the NPDES permit.

In sum, the case raises several issues and leaves several open questions that developers and financers should be aware of:

Opponents of new power plants are likely to argue that this decision undermines the Energy Commission’s exclusive authority over power-plant siting and that it permits project opponents to file lawsuits in Superior Court instead of the Supreme Court for a broad array of claims related to power plant sitings. The case should not be read that broadly. The decision says nothing to undermine the Energy Commission’s authority or the general proposition that any decision the Energy Commission makes as part of siting a plant can only be challenged in the Supreme Court. It simply holds, unsurprisingly, that NPDES permits required outside of the Energy Commission’s proceedings can be challenged in their normal fashion, even if the Energy Commission analyzed related issues in its siting decision.

How broadly courts will use the now-Supreme-Court-blessed interlocutory-remand procedure is an open question. Project opponents will no doubt resist this procedure, because it is relatively efficient, and delay is often synonymous with success for project opponents.

Another open question is whether the remand procedure applies to cases under the California Environmental Quality Act (CEQA). The case overruled two CEQA cases that held interlocutory remands are impermissible. However, the concurring opinion by Justice Wedegar stated that the majority’s analysis on interlocutory remand would not apply to CEQA cases.

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